- The Washington Times - Thursday, May 20, 2004

NEW YORK — The NHL and NBC yesterday announced a groundbreaking, two-year broadcast deal in which pro hockey stays on major network TV but with no upfront rights fee.

Several hours later, the other part of the league’s national TV distribution fell into place when ESPN announced a long-expected extension to its deal that began in 1999. Its sharply reduced new contract will pay the NHL about $60million a year, move all regular season games to ESPN2 and eliminate ABC from coverage.

In lieu of an upfront fee, the league and NBC will share advertising revenues after production costs. Such an arrangement is becoming increasingly common among lesser entities, most notably the Arena Football League. But the new deal marks the first time the concept has reached one of America’s primary team sports leagues.

The NBC and ESPN deals replace a five-year, $600million contract with ESPN and ABC. ESPN’s new deal is for the 2004-05 season, with options for the next two seasons.

The NBC pact, which gives the peacock network an option for a third and fourth season, also stands as the latest example of its mantra to avoid paying massive rights fees for team sports after losing hundreds of millions on the NFL and NBA during the 1990s.

“The world has simply changed,” said Dick Ebersol, NBC Sports chairman. “The money for rights fees is all on the cable side now, since they have [subscription] fees on top of advertising. Nobody dragged NBC into fiscal sanity kicking and screaming. This is simply good, sound business.”

NBC previously aired the NHL in 1966 and from 1972 to 1975 and All-Star Games from 1991 to 1994. The new schedule calls for seven regular season games, six playoff contests and Games 3-7 of the Stanley Cup Finals.

On a surface level, the lack of upfront money represents by far the best deal the struggling league could get. Average ratings for the NHL, while improved this season among several key demographic groups, remain a small fraction of those for the NFL, NBA or Major League Baseball. Labor uncertainty also threatens to wipe out all of next season, making broadcast networks reluctant to make any commitment to the NHL.

But NHL commissioner Gary Bettman predictably championed the deal yesterday, saying economic upside has been preserved. The league also gains a steady Saturday afternoon time slot.

“Given our uncertainty, I’m proud that [NBC] chose to step up with us now,” Bettman said. “We believe NBC has been given appropriate incentive to make this work for everybody, and if this does work as we hope, we will be more than fairly compensated.”

Industry sources said it will be difficult, if not impossible, for the new ESPN/NBC TV distribution to yield the $120million a year the NHL currently gets from national TV in the U.S. But Ebersol also pledged a far greater level of promotion for the NHL than what the league currently receives from ABC.

“ABC’s role in this deal now about to expire was really an afterthought,” Ebersol said. “It really was an ESPN deal. ESPN cut the checks, and they bought the time to get certain games on ABC. We will be out promoting the NHL.”

If games are wiped out next season due to an owners’ lockout, the contract will roll over and begin when play resumes.

“There’s a lot of talk, predictably, about the lack of a rights fee. But this is a good deal, for both the NHL and NBC,” said Neal Pilson, former president of CBS Sports. Now an industry consultant, Pilson helped broker the Arena Football-NBC deal that served as a template for the NHL pact.

“Given the marketplace right now, the ratings [hockey generates] and the network exposure the NHL needs, this is really a solid deal,” Pilson said. “But what it does is end any further hope for a massive influx of new revenue for the league. This is basically it. This is the television package. They’re not building any more seats, and there’s not a lot of upward movement to ticket prices.”

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